The horizon is not so far as we can see, but as far as we can imagine

The Disposable Economy

2014 February 3

by Ian Welsh

The most important fact about modern economies is rarely remarked on: they are job societies. The vast majority of the population works for someone else. For those without jobs, poverty, homelessness, and in some cases death, is a real prospect. Members of modern societies cannot support themselves if someone doesn’t hire them.

This is, in human history, unusual. For most of American history, most people lived on farms, in the country, and grew much of the food they ate, made their own clothes, raised their own homes. They often lived lives we would consider horribly deprived, but they were able to provide for many of their own needs. The craftsman and professional, while they worked for others, had clients, not bosses, and while they had employees many of those employees were training so they might go out on their own.

We take for granted that industrialization, and moving off the farm has improved human welfare, but that is not true in all places, nor in all times. Industrialization in the Britain is synonymous with land enclosure: pushing feudal tenants off land they had previously had the right to use. Supposedly land enclosure vastly improved agricultural output, but it has been shown that communal fields were almost as productive as enclosed ones. Enclosure was done not to grow more food, but to make more profit, and the people who were displaced flooded into England’s cities, where they were compelled by the real prospect of starvation and death, to work in the new factories, six and a half days a week, 12 hours or more (check the #s).

These factory workers lived worse than they had as tenant farmers and serfs. They worked more hours, had less food, died younger, and during their lives suffered more from disease because of the horrible sanitation of European cities at the time. Their lives were virtually unending misery. This is the reason for the idea of Jeffersonain farmer’s democracy: because Americans were aware of the misery of industrialization.

In Mexico, after NAFTA, small farmers lost their farms because they could not compete with subsidized American agriculture. They flooded into Mexican cities, or they headed north to America to work as illegal immigrants. Again, though in some cases they earned more money, the vast majority of them were worse off than when they lived on the farms, and Mexicans as a whole suffered because after American interests bought Mexico’s food industry, the price of food soared, and the quality of that food dropped.

After World War II Americans flooded from the farms into the new cities. For this generation, the GI generation, it was a straight upgrade: their lives were better. They worked less hours, they had more food, they had access to power and indoor plumbing, and good jobs with good pay.

Those Americans were treated very well, and if you weren’t black, the 1950s and 1960s are looked back on as the heyday of American prosperity. Good jobs were plentiful and easy to find and they came with healthcare and good pensions. Life was good.

Today, millenials and Gen-Xers don’t have such a good deal. Unemployment is high, if you lose your job you will have a hard time finding as good one, or a job at all, and good pensions and healthcare plans are more and more uncommon, and increasingly restricted to the executive class.

Why? Well, one reason is this, the family farms are gone. The first generation had to be treated well because they had options: they could go back to the family farm. So their jobs, and their lives as consumers had to be clearly superior to being on a farm.

I’ve spent a lot of time discussing how to make job economies work in the past, because we live in them, and even if we decide to transition away from jobs as our primary method of distribution, it will take time. But never forget: as long as you need a job to survive, you are at the mercy of those who provide jobs, and for most, the only way you are treated well is if you are not easily replaceable. That lack of replaceability is in most cases a social attribute, not a personal one. You are not replaceable if the job market for your set of skills is very tight. As programmers found out, even if you think ahead and master a skill set that is in short supply, that can and will change, because it is not in the interest of employers for you to be hard to replace.

There are a few people who are their own brands. There is only one Madonna, and you cannot easily replace her. There are a few people who are supremely fitted to the current world, for whom making money is easy. But most of us aren’t in one of those positions, and we need to stop thinking that we are. We aren’t special, we aren’t a unique snowflake, and we are replaceable. We will be prosperous together, or not at all.

Joe Bageant chronicled this beautifully in his books and essays, particularly the move from rural to urban/industrial that cost many their independence. My parents’ generation (b 1910-ish) was the last to be able to say that 90% of what they needed was produced more or less locally.

My grandparents had humble incomes but they grew most of their own food, raised chickens, had a milk cow, etc., sewed most of their own clothes, and they were never hungry. NEVER. There was always plenty to eat at Grandma’s house.

My grandfathers had steady blue collar jobs where they worked until the day they retired. They weren’t paid much, but on the other hand they never had to worry about their job being outsourced to China.

One grandfather built his own house when he was a young man and he lived there until the day he died. It was not a McMansion, but it was a stable home, and he didn’t owe any money on it.

Quite a contrast to today’s industrialized “free market” economy where if you lose your job, you may face starvation and homelessness.

Farming also needs to be “sexified”/propaganda to compete with industry. Joel Salatin talks about this a bit. I have some direct experience with this as my father was raised on a rural Irish farm, have many cousins back there who have access to land but no interest in farming. Food production has been so slandered by industrial society…”slow food” and farmers markets are biting back a bit now but it needs to become commonplace.

I should say marketing rather than propaganda. Really it just needs to be recognized as the honorable and necessary profession that it is, but I think that’s a bridge too far at the moment, at least for American society. Permaculture is plenty sexy to draw minds if there were subsidies/incentives to provide land.

I think your view is pretty accurate here; the jobs economy has become a weapon of control and suppression.
I’ve been there when I was in my late 50′s; unemployed, highly skilled/educated and felt the age discrimination up close and personal. It took everything I had to see my unemployment as an opportunity (which it was). Now there is the added discrimination for being unemployed for too long, wtf? Another rigged game.
Fear and insecurity become part of the new normal and those two emotions can limit the ability to make good decisions.
I’m also left with the impression there is a reluctance to think critically in the larger sense of the world. When a suggestion is offered that there may be opportunities outside of ones political borders (all borders being political), it is generally rejected (for myriad reasons).
It would seem Americans believe emigration for employment is only for third worlders; not realizing how woefully close they are to that descriptive (in many ways).
I attribute that to fear, as well as an added dose of provincialism. An insecure known is preferable to an insecure unknown. Combined with a perceived lack of mobility, paralysis ensues with a consequent sense of entrapment (a downward spiral).
It also appears this is more common among the older generation; but it seems the 20 somethings lack imagination or are risk averse to a large degree. I can’t say I know the latter for a certainty, but it’s the sense I get from my various readings and listened interviews.

{“We will be prosperous together, or not at all.”} Ian

I agree; but utterly fail to see how that will happen (prosperous together). We are anything but together. I think a paradigm shift isn’t hard to imagine; but selling it, engineering it? Hmm…
For the collective, the evidence does not support an optimistic outlook, IMO.

Automoderators use automagical, inscrutable spam models. Sometimes things just get down-modded for no explicable reason. Happens on many blogs, only a few of them do I suspect that the mod has blacklisted me

So I was having dinner with my ubersmart biochemist friends who are probably on the short list for a Nobel prize someday, and one of them tells me of an experiment that shows that temperature effects the ability of Roundup to enter the plant cell or something like that. This led to a question by the other biochemist: “Monsanto is good, don’t you think so.” I think Monsanto or some other similar corporation may fund this person’s research, not sure, but anyway, I didn’t take the bait and launch into my diatribe on the evils of Monsanto. I gave a milquetoast answer about how I thought GMO foods should at least be labeled. But I’ve been mulling over all sorts of things I should have said and whether I should send the biochemists posts like this one.

What do you think? And thanks Ian for another great post. Would love to know the cite for this: “Supposedly land enclosure vastly improved agricultural output, but XXX has shown that communal fields were almost as productive as enclosed ones” and the link for Bageant post mentioned in the comments.

Even if we wanted to return to the family farm, we couldn’t, because there’s literally three times too many of us today to do so. Furthermore, the vast majority of people today wouldn’t want to do so even if given the chance — that was a hard life, that’s how my mother lived her childhood prior to electrification reaching the countryside and she has no intention of ever going back there again. Furthermore, the infrastructure to support family farms no longer exists — there are no longer corn mills and cotton gins in every small town of the South, no longer the infrastructure of farriers needed to keep mules properly shod and healthy or of breeders able to breed large numbers of mules for use by small independent farmers, no manufacturers of equipment capable of being drawn by mule… rebuilding all that would be a major endeavor.

Secondly: in a modern economy, the majority of people will be employees rather than owner-operators because of the *scale* required for a modern economy. A modern semiconductor factory costs over $5 billion to build. Convert $5 billion to man-hours. Figuring $50/hour (generous), that’s 100 million man-hours of work, or 12.5 million man-days of work (at 8 hours per day), or 41,666 man-years of work (if working 300 days/year). The only way we know how to organize that much work is via an employer-employee relationship. The Communists tried other ways, such as a commune that jointly owned facilities, and it didn’t scale. It just didn’t.

There’s those of us who are like the mammals in the time of the dinosaurs, who find niches where we can survive without being part of one of these giant dinosaur industries… but we’re reliant on the dinosaurs. For example, the Amazon Cloud is a boon for small business. Finally we can have world-class network connectivity to our customers for a reasonable price! But it relies on having the dinosaur named “Amazon” out there with the scale to provide this service for an affordable price. So people saying we can *all* be masters of our destiny… no. Just no. It can’t happen in a modern advanced economy. There’s just too much *scale* needed.

What this means is that if we want to deal with the oligopsony power of employers (oligopsony is where there are a large number of sellers — us people trying to sell our labor — and a much smaller number of buyers, where the buyers can thus drive down the price of the commodity to its price of production, which in the case of labor is the bare minimum needed for survival), we’re not going to be able to do it by returning to an era where everybody is a small farmer or everybody owns their own small business. Not while maintaining an economy above 3rd world levels. We’re going to have to deal with it other ways — via government regulation, via unions, and so forth — or the vast majority of us are fscked. That’s just reality. Just how it is. Rugged individualism simply doesn’t work in today’s economy, and never can, because oligopsony takes rugged individualism and grinds it under the heel of market power reality. Just how it is.

The bit about moving back to the land is true, if you go back to family farms, yes. The rest, is less and less true as time goes on. I’ll deal with it later.

The Spanish have run employee owned companies, at scale and made it work, btw. Most of the N. American insurance industry was run as mutual companies (owned by policyholders) and that worked. The idea that only corporations work or that the Soviet collapse means that nothing but corps work is straight up wrong.

Mutual insurance companies worked because they did not require a large amount of up-front investment in order to get them off the ground, they just needed sufficient customer-owners to get a viable risk pool. The same is not true of a semiconductor company. I am aware of the Spanish employee-owned companies, as well as other experiments of this type here in the United States. The problem is that none of them have scaled. They’re able to fulfil the needs of small niche markets but they haven’t achieved the scale needed to employ significant numbers of workers. The largest is the Mondragon Corporation of Spain, with some 80,000 employee-owners. But that’s just a drop in the bucket from the perspective of the overall Spanish economy, and Mondragon primarily operates in areas where significant capital investment isn’t necessary, such as retail.

Like it or not, the modern economy wasn’t and couldn’t be built by employee owned cooperatives. This is for both cultural and capital reasons. Cultural — employee owned cooperatives are very conservative and risk averse. They don’t bet the company on a new technology. Capital — employee owned companies don’t trade on stock markets, thus have trouble affording the investments needed to kickstart themselves into major businesses. If you look at the history of major technology businesses, for example, you’ll see a lot of angel and venture investors who put their money into the business to grow it to the point where they could IPO and make a profit from their investment. That doesn’t happen with employee owned cooperatives because there’s no ability to obtain investor funds in that way.

I think the current corporation structure here in the United States is a dysfunctional travesty that doesn’t do a good job of what a system of organizing an economy is supposed to do — provide a good living for the population — but like it or not, corporations as a method of aggregating capital to move into new markets are what has made capitalism a dynamic and responsive system. Cooperative systems by their very nature are static and slow moving. Sometimes static and slow moving are best… but if you’re trying to adapt an economy to meet ever-changing needs and create new products that change the world, static and slow moving just doesn’t get the job done. Unless you intend to claim that Spain is a world leader in anything other than unemployment, there’s no “there” there.

The pushing of tenants off commonly held land in favor of enclosure and rents, and land worked for generations by families beholden to a lord began in the 1500′s, not the 1700′s. It accelerated when steam power machines fed by coal became common, but the process began 2 centuries before under Henry VIII. Prior to his reign it was common for people, including the nobility, to go a year or more without actually handling money — barter was much more common. Due to the political climate of Henry’s time, money became for the very first time a necessity and thus the destruction of the family farm and dependence on money began.

People think serfdom was awful, but in many ways their lives were much more their own than ours are; they worked maybe 50 days per year in work that directly benefitted the nobility to pay their taxes/tithes. We work nearly every day for the same and yet we think our lives are better. I think not. The only thing we have better than they did is our knowledge of diseases and sanitation measures that we take for granted.

The history is more complicated than that, and the mutual insurance companies made up most of the industry. And yeah, they had plenty of capital. They also consistently produced a better, cheaper product than stock companies, this is not in question, it has been studied. Shareholders are a cost. At various times in the history of capitalism most money has been raised by borrowing, at other times by shares, and what determines that is the tax structure, it is a social choice.

As for the idea that it couldn’t have been built, not at all clear. It was built in the USSR. Much of the German industrial revolution was underwritten by government, so was the Japanese. The assumption that “it happened that way, so it had to happen that way” is incorrect. There are other ways to raise money than shareholder companies, and in fact, it is not hard to do so if the government gets involved.

The reasons for Spain’s problems are not related to Mondragon, and you know it as well as I do.

Dogmatic “this form of capitalism exists so nothing else can compete” is of remarkably little interest to me, and the technology is changing. With it, what is possible is changing. There will still be things that need to be done industrial scale, but fewer and fewer. In fact, there are plenty of reasons to believe that your beloved corporations have stifled competition over and over again, and that we are far behind where we would be if they had not.

Don’t have time to go into this further now. Your arguments are standard, exactly what the apologists for capitalism always use, and dealing with them requires a book, not a comment. Your caveats about dysfunctiona are just that, caveats, you still think this is the right system, just not being run very well.

“Your caveats about dysfunctional are just that, caveats, you still think this is the right system, just not being run very well.” Ian

Agree. Our form of capitalism is intentionally dysfunctional at best and criminal at worst.
The Swiss regulate the hell out of their form of capitalism and it seems to function pretty well according to what I’ve read.

Holding up the Soviet economy as an example of good *anything* is pretty sad and pathetic. More on that later. Let us just say that before the final collapse, major parts of the Soviet economy had *negative* productivity — as in, consumed more resources than they produced as outputs. Because their attempts to handle the complexity of modern technological society *failed*. I’ve worked with some of the brightest minds of the old Soviet Union and have a pretty good idea of how their industrial and technological infrastructure worked — and didn’t work — and the complexity issue simply killed them. They never solved it, and the whole affair collapsed.

I’ve spent quite some time looking for good alternatives to capitalism, and all of them suffer from significant problems with flexibility and ability to handle complexity. They simply don’t scale to modern technology. On the other hand, our current capitalist system quite clearly has significant problems. It transfers wealth from the workers who produce wealth to a leach class that contributes nothing to the economy, and is increasingly taking so many critical resources from the workers who produce wealth that life span is declining. But handling that is not an insolvable problem. Laws, regulations, unions, and, yes, mutual companies and not-for-profit corporations and employee-owned businesses where appropriate, all are possible solutions for *some* of the problems we’re facing, but none are a magic bullet in and of themselves.

As for why I keep harping on the complexity problem: I have run the manufacturing operations for three different computer companies over the past twenty years. Each computer that has gone out the door has assembled components from hundreds of suppliers on virtually every continent, and each of those components in turn had components from hundreds of suppliers on multiple continents, each of which required capital equipment and inputs from multiple suppliers on multiple continents for their manufacture. I keep trying to devise some system that would produce these computers other than capitalism, and keep running into the brick walls of capital requirements and complexity. Targeted government intervention has worked for certain industries, but never for anything with this level of complexity. We’ve “trained” the world economy to produce all these components with tokens (money), and companies have gone into business to produce these components using capital from a variety of sources to pay for their current capital investment needed to produce the components via future revenue streams (loans) or via selling stock in the business. But the sheer numbers of people, companies, and resources involved to send a single computer out the door boggles my mind.

Perhaps we could organize everything as a commune, but that chops half the finance mechanism out of the picture and you’re still stuck with capitalism as the primary organizing factor of the economy. And given the sheer complexity of modern technology, with which I’m intimately acquainted, I simply see no way for government itself to replace the function of a properly operating capital market. (Which we do not have right now, but that’s another story).

Again, I don’t know what you do for a living. But I build things. Very complex things. And I *know* the Soviet system could never have built these things. Because that’s what I do for a living, I build things, and I know what it takes to build things. I’m not pulling sh*t out of my rear, this is what I do for a living.

We’re in a hole, both ecological and demographic, where we have to keep shoveling faster and faster to keep it from caving in on us. Right now capitalism is both digging that hole deeper (so that it’s more precarious) and giving us bigger and better shovels to keep our heads above the dirt. And unlike you, I’m not seeing a magic bullet that’s going to get us out of that hole given that the ecological change at this point appears unavoidable and the demographic problem is only going to get worse. I’m just hoping I’ll be dead by the time it caves in and we have a mass die-off of most life on Earth including most of the human race, but things being what they are… (shrug). I’m not optimistic.

”In Mexico, after NAFTA, small farmers lost their farms because they could not compete with subsidized American agriculture. They flooded into Mexican cities, or they headed north to America to work as illegal immigrants.”

This is a point that hasn’t been expanded on enough. The Walmartization of America created by NAFTA and other so-called trade agreements actually generated an illegal immigration problem for the U.S. that has become a double-edged sword. Our demand for cheap goods which is most certainly derived from American dominance in the cheap foreign labor markets, that in turn undermines independence for indigent people forcing them to move to the large cities or wealthier countries where they can have some sort of income just to survive.

Those opposed to the current efforts at immigration reform that allows a path to citizenship can’t have it both ways – cheap foreign market goods and blocking/deporting workers who cross our borders to not only find sustenance for themselves and families but provide cheap labor for much of what we consume here.

They’re only “cheap” goods from the owners’ perspective. The poor slobs who buy the stuff just end up sending much much more of their money to the owners and much much less to the workers. In any case, this blathering about the public “demanding” free trade is 100% pure BS. It was business that demanded it, the public got railroaded.

(And I love the phrase “American dominance in foreign labor markets”–so much prettier than “colonization”.)

Why? Well, one reason is this, the family farms are gone. The first generation had to be treated well because they had options: they could go back to the family farm. So their jobs, and their lives as consumers had to be clearly superior to being on a farm.
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I think the only reason one generation (not the first) of those leaving the farms got a fair shake was because of the soviet union and to a lesser extent nordic socialism. For a while they were afraid of what would happen if the Depression went on and folks saw those as viable alternatives. So for a brief time they made their version of capitalism a better alternative. With the downfall of the USSR and the eastern block, those niceties were quickly dispensed with.
As for the Mexicans, I don’t see that so much as a big conspiracy to move them off the land and weaken the position of job workers (that was just an added bonus). ADM and the rest wanted new markets to sell all that surplus corn and soy they were getting govt subsidies to grow. And Americans wanted cheap labor to grow cheap lettuce and tomatoes (in fields where we had become too soft to work), and in construction to build houses 2 and 3 time bigger, for families that are half as big, as a couple generations ago. So a bunch of white small businessmen and growers could hoard all the surplus and act like they are the real backbone of America, overseeing the shiftless takers, always asking for *money* for the privilege of having a job.

I think you seriously overlook the suffering that allows these “complex things” to be built.

But more seriously, the focus of our system on “complex things” like the internet to a degree is because the system works to concentrate power and wealth at the top. instead of 500,000 book stores, one Amazon. Instead of the corner record store, iTunes. You are assuming that these complex things are good, are positive. That is quite an assumption in itself.

To argue that the Soviet Union failed on all levels is also questionable. The system drug a peasant, priest-ridden society into the modern world. Not very well and not uniformly, but have you simply driven around an American metropolitan area and observed what our vaunted culture and economic system has produced? A nationwide eyesore, to be honest.